Problem 11. An insurance company has a life insurance policy that costs the customer $100 per year, and pays out $100,000 if the customer dies that year. Suppose 7 customers have this policy, and the probability that a customer that year will die is o.o1. The insur- ance company has budgeted $200,0oo for possible payouts that year. (a) How many people would have to die for the insurance company to have insufficient funds to pay out? (b) What is the probability of the budget being sufficient? (c) We wish to calculate the expected profit to the insurance company for that year. What's the profit to the company if no one dies? What is the probability of this occurring? (d) What's the profit to the company if 2 people die? What is the probability of this occurring? (e) Continue this strategy to find the expected profit to the company for that year. /2 2 Activity Details NOV 14 11 F8 F3 F4 F5 F6 F7 $ & 5 6 7 8

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Statements and Logic

Logic is the analysis of general patterns of thoughts without regard to any specific sense of context.